Cannacurio # 49 – New Jersey License Breakdown and Legalization

Three medical cannabis markets will soon open to adult consumption on the east coast. Connecticut, New Jersey, and New York have all legalized themselves within the past year and are preparing to be licensed and go on sale. For the next three weeks we will look at each of these markets and the current state of cannabis before each market develops. This week we’re going to be checking out New Jersey.

In the 2020 election, New Jersey voters approved a constitutional amendment to legalize cannabis. The passage of Question 1 was awaited, and the brief constitutional amendment left many details for the legislature to clarify. Almost a year later, the legislature has advanced and regulators have issued final rules to expand the medical industry to include adult applications.

Current license holder – Medical System

New Jersey has historically been one of the stricter states on cannabis regulation. The market is currently controlled by a limited number of licensees and home cultivation is prohibited.

Cultivation and pharmacy licenses are now dominated by Multi-State Operators (MSOs) including Acreage, Ascend Wellness, Ayr Wellness, Columbia Care, Curaleaf, Green Thumb Industries, TerrAscend, and Verano Holdings.

Additionally, Justice Grown currently only has a cultivation license, and some local operators also have grow shops and pharmacies. Late last summer, some of these MSOs continued their expansion by opening additional stores under their existing licenses, allowing the state’s market to grow significantly.

Over two years ago regulators tried to open the medical cannabis program further by accepting applications for more than two dozen additional licenses. The state’s cannabis regulatory commission has accepted nearly a hundred additional pharmacy and cultivation license applications, including MSOs like Harvest, Medpharm, and Vireo, as well as regional operators like NY-based Etain.

Litigation has delayed the expansion of medical cannabis, which may be contributing to slowing adult approval progress overall. This Friday, the state will award winners of medical expansion – up to 24 licenses, including 15 new pharmacies, five growing areas and four manufacturing licenses.

All medical cannabis license holders can accelerate their transition to the adult use market by paying a conversion fee and demonstrating that they can continue to serve patients with a card. These requirements are not unprecedented.

Many states, including Oregon and Washington, required licensees to switch their licenses from medical to adult use before entering the new market. In addition, some state regulators have required that a percentage of inventory be reserved for medical cannabis patients to reduce the risk of a shortage when adult sales begin.

It is noteworthy that no single community currently has more than one medicinal cannabis operation, so no city is flooded with old retail stores on day one.

New license types available

The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMM Act) introduced five license classes – an extension of the existing medical system.

The state’s Cannabis Regulatory Commission (CRC) defines each class. There is a license class for each licensed activity: cultivation, manufacture, distribution, delivery, and retail. In addition, testing laboratories are licensed and companies can obtain a conditional cannabis business license without specifying a class until all requirements are met.

In addition, micro-businesses are licensed for each of the listed activities. As we have seen in other states, these facilities are limited by the number of staff, facility size restrictions, and limits on the number of plants and the amount of cannabis usable on site each month.

For almost the first two years of the program, the number of cultivation licenses will be limited. Unlike some recently established markets including Illinois and Arizona, there are no restrictions on retail licenses.

Fees vary by license type, and for cultivation licenses, license fees vary based on canopy size. Micro-business licenses are cheaper – including application and annual fees. Standard grow licenses range from $ 5,000 to $ 50,000, while retail stores cost $ 10,000. The license fees are the same for renewals from year to year.

Local control means limited sales opportunities

CREAMM gives the New Jersey communities considerable leeway to regulate cannabis deals and licenses, and many cities and towns have opted for a total ban, at least temporarily.

A deadline was set for municipalities at the end of August, just days after the final rules were published. With limited time to make a decision, over 70% of the state’s local governments have decided against it.

Over 400 cities and towns have banned cannabis deals, according to USA Today Network / Asbury Park Press. In other countries, over 40 municipalities have only opted out of retail licensing, but will allow other activities. In addition, nearly a dozen communities have opted out of adult sales only, but will continue medical operations.

The largest city in the state, Newark, with about 310,000 residents, decided to introduce license caps. Cultivation, manufacturing, delivery and retailing are limited to five licenses each, and two retail stores can be consumed on-site. Testing, distribution, and wholesale are limited to three licenses each city-wide. As in many other municipalities, building restrictions and other permit requirements also apply. Similar caps will reduce business start-up opportunities while limiting future tax revenues.

The big picture

While the timing is still unclear, medical cannabis companies will likely feel the rumble of the new market first. Existing companies will have the option to apply for combined licenses for medical and adult users and will also be forced to expand their capacities. It also opens licenses to everyone, including priority social justice applicants.

Regulators are also required to give 30 days’ notice in advance of sales – in addition to the many months it takes to get licenses and build facilities. Operations in New Jersey are not expected to begin until spring 2022.

Cannabiz Media customers can keep up to date on these and other new licenses through our newsletter, warning and reporting modules. Subscribe to our newsletter to receive these weekly reports in your inbox. Or you can schedule a demo for more information on how you can access the Cannabiz media license database yourself to examine this data in more detail.

Cannacurio is a weekly column from Cannabiz Media with insights from the most comprehensive license data platform.